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sâmbătă, 12 iunie 2021 - 14:10

EU Commission attaches a list of reforms to Romania’s Resilience Plan

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The European Commission (EC) insisted on attaching a list of reforms to accomplish on the €16 bln soft loan extended to Romania under the Relaunch and Resilience Plan and will invite the International Monetary Fund (IMF) to assist in monitoring the execution of the reforms on the list, according to Romania-Insider. 

The IMF has served as a monitoring body for the Commission’s macroeconomic assistance program run in parallel with its own Stand by Arrangements.

The Minister of Investments and European Funds, Cristian Ghinea, reportedly advocates for using the €16 bln soft loan first and only in a second stage absorbing the grants. The Minister explained that he wants the €16 bln borrowed quickly and argues that his ministry does not have the necessary capacity to absorb the grants.

Not all the countries decided to use the entire portion of soft loans allotted by the Commission as some of them accepted only the grants (which will be paid by all countries by temporarily increased contribution to the EU budget).

Minister of Finance Alexandru Nazare rejected quick borrowing of the entire €16 bln (7% of GDP) soft loans since this would push up the country’s indebtedness ratios.

Irrespective of the strategy eventually decided by the Government, the IMF’s monitoring will provide certain confidence as regards the implementation of the promised reforms (to the extent the reforms included in the SBAs were implemented) – but the austerity measures starting with making the pension system more sustainable to using more green (expensive) electricity are likely to create social tensions.